Three States With Laws Allowing Water Utility Customer Assistance Programs

Three States With Laws Allowing Water Utility Customer Assistance Programs

August 12, 2016

Written by: Michael BurgessMichael Burgess is a law student in the class of 2018 at the Emory University School of Law. He currently serves as a legal intern for the UNC Environmental Finance Center.

Unlike your favorite TV show, college football, or even your cell phone, water is a truly vital part of life. However, many Americans may still not have affordable access to this necessity. The question of whether or not water is “affordable” in some communities is an ongoing debate. State laws, aging infrastructure, lack of funding, and many other challenges can limit a utility’s ability to address affordability concerns. However, some states have provided a framework for utilities in their state to address the challenges utilities face to provide affordable access to water for all. Customer Assistance programs (CAPs) are utility-sponsored programs that help provide low-income customers with affordable access to water through various discounts or other cost reduction methods. California, West Virginia, and Washington, discussed in detail below, currently have laws in place that enable water utilities to create CAPs.

California

On July 28, 2010, the U.N made a statement that there is a human right to water and sanitation in Resolution 64/292. Following in the U.N.’s footsteps, California passed the “Human Right to Water Bill” in 2012, which subsequently became part of California’s Water Code. Similar to the UN resolution, this bill established that water was a human right in California. Following this bill, the question became how California could ensure all of its citizens were afforded this right to water while rates and costs for water utilities continued to rise. Addressing such a question was very different for investor owned utilities and government owned water utilities.

Currently, almost all investor owned utilities, which are regulated by the California Public Utilities Commission, can and do have CAPs in place. In fact, all “Class A” investor owned utilities, which are large water utilities with over ten thousand connections, have CAPs in place for low-income customers. However, the California Public Utilities Commission does not regulate government owned utilities. Furthermore, California law, as modified after Proposition 218, requires that public utility expenses funded by rate revenue must be part of the cost of service. This prevents public utilities from funding their own CAPs. However, California recently passed the Low-Income Water Rate Assistance Act in October of 2015. This act gives the State Water Resources Control Board the authority to develop a plan for funding and implementing low-income rate assistance programs. Although this bill does not require or even authorize government water utilities to bypass Proposition 218 and create low-income assistance programs funded by rate revenue, it does leave the door open for the California legislature to make new laws allowing government water utilities in the state to have and fund their own CAPs in the near future. It will be interesting to see how the courts rule on any new low-income CAP legislation, since it could very well come into conflict with Proposition 218. California has made good headway at ensuring affordable water for low-income customers of investor owned utilities, and the Low-Income Water Rate Assistance Act is a good starting point to do the same for low-income customers of government owned utilities.

West Virginia

West Virginia is another state providing a way for some of its utilities to implement low-income CAPs. However, it uses a different method than California. West Virginia has an exception in its statutory code, which allows investor owned utilities to voluntarily implement reduced rates for certain, qualifying low-income customers. Specifically, this exception allows investor owned utilities to bypass another West Virginia statute, which provides that utilities cannot charge different rates to customers under the same or substantially similar circumstances or conditions. In fact, West Virginia law currently prevents government owned utilities from providing CAPs to low-income customers. On the other hand, investor owned utilities have the option to voluntarily provide low-income CAPs to customers who receive assistance from any one of the following four programs: Social Security Supplemental Security Income, Temporary Assistance for Needy Families, Temporary Assistance for Needy Families-Unemployed Parent Program, or if they are sixty years or older, assistance from the Supplemental Nutrition Assistance Program. The reduced rate can provide as much as a twenty percent reduction from the current, set rate. In addition to requiring that customers receive some form of current government assistance, the exception further provides that rates cannot be lowered for qualifying people living in a house owned by someone who does not qualify. While very different from California, West Virginia’s statutory exception is another approach that takes a big step toward providing affordable water to everyone in the state.

Washington

Washington is another state that has a legal framework that allows its water utilities to implement low-income CAPs. In Washington, government, municipal, county, and city utilities are expressly granted permission under Washington statutory code to implement rate discounts for low-income customers and elderly low-income customers. In addition, County utilities are required by statute to set rates that produce revenues sufficient to take care of maintenance costs, operation costs, and all other charges necessary for efficient and proper operation of the system. However, this statutory language leaves leeway for counties to include CAP costs in their rate structures. For all of the above utilities, the eligibility requirements for these CAPs are not defined by statute. This means that the utilities can create their own criteria to determine who qualifies for their CAPs. In addition, Washington law allows counties, cities and towns to waive connection or tap fees for utilities provided to low-income customers. However, waived or delayed fees of this kind must be “pursuant to a program established by ordinance.”

Investor owned water utilities in Washington, on the other hand, are regulated by the Washington Utilities and Transportation Commission, “WUTC.” Specifically, if such utilities want to implement CAPs, they have to request approval from the WUTC to provide reduced rates to elderly low- income customers and low-income customers. Additionally, state law requires that “expenses and lost revenues as a result of these discounts shall be included in the company’s cost of service and recovered in rates to other customers.” As compared to other states, Washington has extensive legal provisions allowing both its government owned and investor owned utilities to provide low-income CAPs to its needy customers.

What Have We Learned

Ultimately, there is no set way or catch-all solution to provide affordable, clean water to everyone. Every state has different needs, regulations, customers, utilities, and more that it must consider when it makes decisions in relation to allowing CAPs. Clearly, the three states discussed above all take different approaches in their attempts to provide affordable, clean water to their residents. If we were to fully analyze every state, we would undoubtedly find a multitude of different situations and approaches. However, the above states provide different examples of the framework for providing affordable water for everyone. After all, water is a necessity to life and how we pay for it matters.

What is your state doing to ensure that its residents have access to water?